Insurance Exchange 101: Here's What You Need To Know

NPR icon by Julie Rovner
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John Hanna

The Affordable Care Act has been through two years of legislative wrangling, a presidential election and a Supreme Court test that took it to the brink.

Now, after yet another round of debate and argument, major pieces of the federal health law are expected to kick in Tuesday.

If all goes as planned, people who don't have insurance or who buy it on their own will be able to shop online or at various locations in their communities for coverage that will take effect Jan. 1.

These insurance marketplaces, or exchanges, have gotten the lion's share of attention lately, but who should be looking to buy insurance on the exchanges anyway?

Well, definitely not everyone. These exchanges are for two major groups of people. Those who don't have insurance now. And those who currently purchase their own insurance, meaning they don't get it through an employer.

And since we've had a lot of questions about this, no, the exchanges won't be selling policies that supplement the coverage seniors get through Medicare.

So, if you have insurance at your job, or through a public program like Medicare, Medicaid or the VA, you don't need to pay attention to the exchanges unless you lose that coverage for some reason.

How will the exchanges work? In theory you can do it all online. Every state will have its own website. Some of these are being run by the states, some are being run by the federal government, and some are being run by a combination of the two.

But consumers won't be able to tell the difference. You'll go to the website, provide some basic information, like where you live and how old you are, and you'll get a list of plans available in your area.

If you provide income information, you'll be able to get an estimate of whether you'll eligible for federal help paying for insurance or whether you might qualify for Medicaid.

So who's eligible for help buying private insurance in the exchange?

The subsidies are fairly generous. If you have income between 100 percent of the poverty level (about $11,000 for an individual) and 400 percent, you can get some help paying for premiums. A family of four can get a subsidy, although just a small one, with income up to about $90,000.

People with income less than 2 1/2 times the poverty level, or about $29,000, can also get help with deductibles and copayments. But those people would have to choose a so-called silver plan. That's the second lowest cost of the four levels of coverage that will be available — bronze, silver, gold and platinum.

How much will insurance cost? The federal government released some premium information last week that helps some but don't clarify everything.

It seems that premiums aren't going to be as high as some people had been predicting. And especially if you're eligible for a federal subsidy, as President Obama keeps saying, most people should be able to find a plan that costs not much more than their monthly cell phone or cable bill.

But there are some caveats. One is that the cheaper plans come with big deductibles and lots of other out of pocket costs. Now if you don't think you're going to have much in the way of medical expenses, that may be fine. But people should be aware that if they buy a plan that only costs $40 or $50 a month, they may have a $5,000 deductible before the plan starts paying benefits.

The other is that some of these less expensive plans come with very limited lists of doctors and hospitals. So if you have a particular doctor or hospital you know you want to use, you should check that before you sign up.

Speaking of signing up, what if you need help? There are supposed to be lots of helpers out there. Most states have trained people called assisters and navigators who can walk people through the process. Although in some states the training for them has been delayed. There are also call centers attached to every state website and the federal website healthcare.gov.

It's important to keep in mind that there are likely to be lots of computer glitches are likely at the beginning. But most people expect that the first couple of weeks are likely going to be mostly for window shopping anyway. The important date here is Dec. 15. If you sign up by then, your coverage can start by Jan. 1, which is the earliest any of these plans kick in anyway.

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